V 4 Build an Application Rationalization Framework Manage

V 4 Build an Application Rationalization Framework Manage your application portfolio to minimize risk and maximize value. Info-Tech Research Group Inc. is a global leader in providing IT research and advice. Info-Tech’s products and services combine actionable insight and relevant advice with ready-to-use tools and templates that cover the full spectrum of IT concerns. © 1997 -2020 Info-Tech Research Group Inc. Info-Tech Research Group 1

ANALYST PERSPECTIVE You're not rationalizing for the sake of IT, you’re rationalizing your apps to create better outcomes for the business and your customers. Consider what’s in it for delivery, operations, the business, and the customer. – Cole Cioran, Senior Director – Research, Application Delivery and Management Info-Tech Research Group 2

Our understanding of the problem This Research Is is Designed For: This Research Will Help You: üApplication portfolio managers, application üMeasure the business value of your portfolio management (APM) teams, or any application leaders who are tasked with making application portfolio decisions. üApplication leaders looking to align their portfolios to the organization’s strategy. üApplication leaders who need a process for applications. üRationalize your portfolio to determine the best disposition for each application. üInitiate a roadmap that will showcase the future of your applications. rationalizing their applications. This Research Will Also Assist: This Research Will Help Them: You: üCIOs and other business leaders who need to üBuild their reputation as an IT leader who understand the applications in their portfolio, the value they contribute to the business, and their strategic direction over a given timeline. üSteering committees and/or the PMO that needs to understand the process by which application dispositions are generated. drives the business forward. üDefine the organization’s value statement in the context of IT and their applications. üVisualize the roadmap to the organization’s target application landscape. Info-Tech Research Group 3

Executive summary Situation • Almost two-thirds of organizations report that they have too many or far • • too many applications due to sprawl from poorly managed portfolios (Flexera, 2015). Application managers are spending too much time supporting non-critical applications and not enough time on their most vital ones. Application managers need their portfolios to be current and effective and evolve continuously to support the business or risk being marginalized. Complication • The necessary pieces of rationalization are rarely in one place. You need • to assemble the resources to collect vital rationalization criteria. There is a lack of standard practices to define the business value that the applications in a portfolio provide and, without value rationalization, decisions are misaligned to business needs. • There is no one size fits all. Applying a rigid approach with inflexible inputs can delay or prevent you from realizing value. Play to your strengths and build a framework that aligns to your goals and limitations. • Business value must drive your decisions. Of the 11 vendor capabilities asked about by Info-Tech’s Software. Reviews, “business value created” has the second highest relationship with overall software satisfaction. • Take an iterative approach. Larger approaches take longer and are more likely to fail. Identify the applications that best address your strategic objectives, then: rationalize, learn, repeat. Resolution • Define the roles, responsibilities, and outputs for application rationalization within your application portfolio management • • (APM) and other related practices. Build a tailored application rationalization framework (ARF) aligned with your motivations, goals, and limitations. Apply the various application assessments to produce the information, which your dispositions will be based on, and adapt your ARF based on the experiences of your first iteration. Review, determine, and prioritize your application dispositions to create a portfolio strategy aligned to your goals. Initiate an application portfolio roadmap, which will showcase your rationalization decisions to key stakeholders. Info-Tech Research Group 4

Info-Tech recommends a disciplined, step-by-step approach as outlined in our Application Portfolio Strategy Program Step 1 “No Knowledge”: Define application capabilities and visualize lifecycle stages Step 2 “No Strategy”: Rationalize application portfolio and visualize strategic directions Step 3 “No Plan”: Build a product roadmap and visualize the detailed plan 1. Build in Application Portfolio Mgmt. Principles 2. Conduct Application Alignment 4. Set Your Rationalization Framework 3. Build Detailed Application Inventory 5. Conduct Assessment & Assign Dispositions 7. Conduct an Impact Assessment 8. Determine the Details of the Disposition Application Discovery 6. Create an Application Portfolio Roadmap 9. Create Detailed Product Roadmaps Application Rationalization Detailed Disposition Planning This blueprint focuses on step 2 of Info-Tech’s Application Portfolio Strategy Program. Our methodology assumes you have completed the following activities, which are outlined in Discover Your Applications. • • Collected your full application inventory (including Shadow IT) Aligned applications to business capabilities • • Determined redundant applications Identified appropriate subject matter experts (business and technical) for your applications Info-Tech Research Group 5

Info-Tech’s four-phase methodology Phase 1 Phase 2 Phase 3 Phase 4 Lay Your Foundations Plan Your ARF Test and Adapt Your ARF Initiate Your Roadmap • Define Motivations, Goals, and Scope • Iteration and Engagement Planning • Establish Rationalization Inputs and Current Gaps • Perform First Iteration Analysis • First Iteration Retrospective and Adaptation • Prioritize and Roadmap Applications This phase is intended to establish the fundamentals in launching either a rationalization initiative or ongoing practice. This phase is intended to review a high-level approach to rationalization and determine which analyses are necessary and their appropriate level of depth. This phase is intended to put the ARF into action and adapt as necessary to ensure success in your organization. Here we define goals, scope, and the involvement of various roles from both IT and the business. Here we produce an initial ARF and discuss any gaps in terms of the availability of necessary data points and additional collection methods that will need to be applied. If appropriate, here we apply Info-Tech’s ARF and toolset and test it against a set of applications to determine how best to adapt these materials for your needs. • Ongoing Rationalization and Roadmapping This phase is intended to capture results of rationalization and solidify your rationalization initiative or ongoing practice. Here we aim to inject your dispositions into an application portfolio roadmap and ensure ongoing governance of APM activities. Info-Tech Research Group 6

There is an inconsistent understanding and ownership of the application portfolio What can I discover about my portfolio? Application portfolios are misunderstood. Portfolios are viewed as only supportive in nature. There is no strategy or process to evaluate application portfolios effectively. As a result, organizations build a roadmap with a lack of understanding of their portfolio. 72% of organizations do not have an excellent understanding of the application portfolio (Capgemini). How can I improve my portfolio? Misalignment between Applications and Business Operations. Applications fail to meet their intended function, resulting in duplication, a waste of resources, and a decrease in ROI. This makes it harder for IT to justify to the business the reasons to complete a roadmap. 48% of organizations believe that there are more applications than the business requires (Capgemini). How can my portfolio help transform the business? IT’s budget is to keep the lights on. The application portfolio is complex and pervasive and requires constant support from IT. This makes it increasingly difficult for IT to adopt or develop new strategies since its immediate goal will always be to fix what already exists. This causes large delays and breaks in the timeline to complete a roadmap. 68% of IT directors have wasted time and money because they did not have better visibility of application roadmaps (Computer. Weekly). Info-Tech Research Group 7

Roadmaps can be the solution, but stall when they lack the information needed for good decision making An application portfolio roadmap provides a visual representation of your application portfolio, is used to plan out the portfolio’s strategy over a given time frame, and assists management in key decisions. But… You can’t confirm redundancies without knowing every app. You can’t change an app without knowing its backend. You can’t rationalize without the business perspective. You can’t rationalize what you don’t know. A roadmap is meaningless if you haven’t done any analysis to understand the multiple perspectives on your applications. Info-Tech Research Group 8

Application rationalization ensures roadmaps reflect what the business actually wants and needs Discover, Improve, and Transform Through Application Rationalization Your application rationalization effort increases the maturity of your roadmap efforts by increasing value to the business. Go beyond the discover phase – leverage application rationalization insights to reach the improve and transform phases. Application rationalization is the practice of strategically identifying business applications across an organization to determine which applications should be kept, replaced, retired, or consolidated (Tech. Target). Strong Apps Are Key to Business Satisfaction 79% Companies with an effective portfolio are twice as likely to report high-quality applications, four times as likely to report high proficiency in legacy apps management, and six times as likely to report strong business alignment. of organizations with high application suite satisfaction believe that IT offers the organization a competitive edge over others in the industry. (Info-Tech Research Group, N=230) Info-Tech Research Group 9

Rationalization comes at a justified cost Savings New Projects Rationalization can reduce costs and drive innovation Cost of Rationalization New Projects Cost of Existing Portfolio Increase in Innovation Decrease in Overall Portfolio Spend Cost of Existing Portfolio Before Rationalization Decrease in Operations Projecting the ROI of application rationalization is difficult and dangerous when used as the only marker for success. However, rationalization, when done effectively, will help drop operational or maintenance costs of your applications as well as provide many more opportunities to add value to the business. After Rationalization Time Adapted from Lean. IX, 2017 Info-Tech Research Group 10

Organizations lack a strategic approach to application rationalization, leading to failure IT leaders strive to push the business forward but are stuck in a cycle of reaction where they manage short-term needs rather than strategic approaches. Why Is This the Case? Lack of Relevant Information Rationalization fails without appropriately detailed, accurate, and up-to-date information. You need to identify what information is available and assemble the teams to collect and analyze it. Failure to Align With Business Objectives Rationalization fails when you lack a clear list of strategic and collaborative priorities; priorities need to be both IT and non-IT related to align with the business objectives and provide value. IT Leaders Fail to Justify Projects Adhering to a rigid rationalization process can be complex and costly. Play to your strengths and build an ARF based on your goals and limitations. Misaligned portfolio roadmaps are known to lead teams and projects into failure! Building an up-to-date portfolio roadmap that aligns business objectives to IT objectives will increase approval and help the business see the long-term value of roadmapping. Info-Tech Research Group 11

Don’t start in the middle, ensure you have the basics down Transform 1 2 Improve 3 Transform Value to the Business Application portfolio strategy practice maturity stages Innovate Business • • Innovate Processes • Modernize Product • Restructure Architecture • Restructure ing p Architectureap • Reduce Costs dm • Eliminate oa R • Reduce Costs Redundancy • Increase & • Increase n • Reduce Business o • Predict Retirement ti Business a Complexity Value iz Value al n • Eliminate io at Redundancy • Recognize R • Recognize • Collect Inventory New • Reduce Risk t • Reduce n • Discover Capabilities e m Business n • Increase lig • Uncover Efficiency Use A Efficiency • Enable n • Enable Shadow IT o i t Scalability & & a • Uncover • Increase ic l Agility Redundancy Productivity pp A • Identify Lifecycle Stage Improve Discover Rigor of APM Practice Info-Tech Research Group 12

Disambiguate your systems and clarify your scope Bundling systems under common banner or taking a product view of your applications and components can be an effective way to ensure you include your full collection of systems, without having to perform too many individual assessments. Middleware Product Broad or unclear definitions of “application” can complicate the scope of rationalization. Take the time to define an application and come to a common understanding of the systems which will be the focus of your rationalization effort. Applications APIs Define the items that make up your portfolio. Application UI Data Infrastructure Source: Info-Tech Research Group Scope Single… Capability enabled by… Whole… Digital Product+ Service Digital Platform Portfolio Product (one or more apps) Product Family Product Portfolio Application Architecture Application Portfolio Customer Facing Info-Tech’s framework can be applied to portfolios of apps, products, and their related capabilities or services. However you organize your tech stack, Info-Tech’s application rationalization framework can be applied. Internal Info-Tech Research Group 13

Understand the multiple lenses of application rationalization and include in your framework There are many lenses to view your applications. Rationalize your applications using all perspectives to assess your portfolio and determine the most beneficial course of action. Applica tio Alignm n ent Busine ss Value TCO End-Us e Perspe r ctive Technic al Value Application Portfolio Manager APPLICATION ALIGNMENT BUSINESS VALUE TCO How well does the entire portfolio align to your business capabilities? Is the application producing sufficient business value? What is the overall cost of the application? Are there overlaps or redundancies in your application features? Does it impact profitability, enable capabilities, or add any critical factor that fulfills the mission and vision? What is the projected cost as your organization grows? What is the cost to maintain the application? CEO Perspective CIO Perspective Covered in Discover Your Applications. Architect Perspective END USER TECHNICAL VALUE How does the end user What is the state of the perceive the application? backend of the application? What is the user experience? Has the application Do the features adequately maintained sufficient code support the intended quality? Is the application functions? reliable? How does it fit into Is the application important your application architecture? or does it have high utilization? End-User Perspective App Team Perspective Each perspective requires its own analysis and is an area of criteria for rationalization. Info-Tech Research Group 14

Apply the appropriate amount of rigor for your ARF based on your specific goals and limitations Ideally, the richer the data the better the results, but the reality is in-depth analysis is challenging and you’ll need to play to your strengths to be successful. Applica tio Alignm n ent Busine ss Value TCO End-Us e Perspe r ctive Technic al Value Application Portfolio Manager Light-Weight Assessment Thorough Analysis App to capability alignment. Determine overlaps. Subjective 1 -10 scale Subjective T-shirt size (high, med. , low) End-user surveys Performance temperature check App to process alignment. Determine redundancies. Apply a value measurement framework. Projected TCO with traceability to ALM & financial records. Custom build interviews with multiple end users Tool and metricbased analysis There is no one-size-fits all rationalization. The primary goal of this blueprint is to help you determine the appropriate level of analysis given your motivations and goals for this effort as well as the limitations of resources, timeline, and accessible information. Info-Tech Research Group 15

Rationalize and build your application portfolio strategy the right way to ensure success Big-Bang Approach x x An attempt to assess the whole portfolio at once. The result is information overload. Information gathered is likely incomplete and/or inaccurate. Tangible benefits are a long time away. Iterative Approach ü ü ü Covert Approach x x Information is collected behind the scenes and whenever information sources are available. Assumptions about the business use of applications go unconfirmed. Sponsored Mandate Approach ü ü Corner-of-the-Desk Approach x x x No one is explicitly dedicated to building a strategy or APM practices. Information is collected whenever the application team has time available. Benefits are pushed out and value is lost. Carried out in phases, concentrating on individual business units or subsets of applications. Priority areas are completed first. The APM practice strengthens through experience. The appropriate business stakeholders participate. Rationalization is given project sponsors who champion the practice and communicate the benefits across the organization. Dedicated Approach ü ü Rationalization and other APM activities are given a budget and formal agenda. Roles and responsibilities are assigned to team members. Info-Tech Research Group 16

Use Info-Tech’s Application Portfolio Assessment Diagnostic to add the end users’ perspective to your decision making Prior to Blueprint Call 1 -888 -670 -8889 to inquire about or request the Application Portfolio Assessment. The approach in this blueprint has been designed in coordination with Info-Tech’s Application Portfolio Assessment (APA) Diagnostic. While it is not a prerequisite, your project will experience the best results and be completed much quicker by taking advantage of our diagnostic offering prior to initiating the activities in this blueprint. USE THE PROGRAM DIAGNOSTIC TO: • Assess the importance and satisfaction of enterprise applications. • Solicit feedback from your end users on applications being used. • Understand the strengths and weaknesses of your current applications. • Perform a high-level application rationalization initiative. INTEGRATE DIAGNOSTIC RESULTS TO: • Target which applications to analyze in greater detail. • Expand on the initial application rationalization results with a more comprehensive and business-value-focused criteria. Info-Tech Research Group 17

Use Info-Tech’s Application Rationalization Tool to determine and then visualize your application portfolio strategy INFO-TECH DELIVERABLE Screenshot of Application Portfolio Roadmap Tool At the center of this project is an Application Rationalization Tool that is used as a living document of your: 1. Customizable Application Rationalization Framework 2. Recommendation Dispositions 3. Application Portfolio Roadmap (seen below) Use the step-by-step advice within this blueprint to rationalize your application portfolio and build a realistic and accurate application roadmap that drives business value. . Screenshot of Application Portfolio Roadmap Info-Tech Research Group 18

Central to our approach to application rationalization are industry-leading frameworks Info-Tech uses the APQC and COBIT 5 frameworks for certain areas of this research. Contextualizing application rationalization within these frameworks clarifies its importance and role and ensures that our assessment tool is focused on key priority areas. The APQC and COBIT 5 frameworks are used as a starting point for assessing application effectiveness within specific business capabilities of the different components of application rationalization. APQC is one of the world's leading proponents of business benchmarking, best practices, and knowledge management research. COBIT 5 is the leading framework for the governance and management of enterprise IT. In addition to industry-leading frameworks, our best-practice approach is enhanced by the insights and guidance from our analysts, industry experts, and our clients. 33, 000+ 1, 000+ Our peer network of over 33, 000 happy clients proves the effectiveness of our research. Our team conducts 1, 000+ hours of primary and secondary research to ensure that our approach is enhanced by best practices. Info-Tech Research Group 19

A public utility organization is using Info-Tech’s approach for rationalization of its applications for reduced complexity CASE STUDY Industry Source Public Sector Info-Tech Research Group Challenge Solution Results • The public utility has a complex application portfolio, with a large number of applications custombuilt that provide limited functionality to certain business groups. • The organization needed to move away from custom point solutions and adopt more hosted solutions to cater to larger audiences across business domains. • The organization required a comprehensive solution for the following: o Understanding how applications are being used by business users. o Unraveling the complexity of its application landscape using a formal rationalization process. • The organization went through a rationalization process with Info. Tech in a four-day onsite engagement to determine the following: o Satisfaction level and quality evaluation of end users’ perception of application functionality. o Confirmation on what needs to be done with each application under assessment. o The level of impact the necessary changes required for a particular application would have on the greater app ecosystem. o Prioritization methodology for application roadmap implementation. • Info-Tech’s Application Portfolio Assessment Diagnostic report helped the public utility understand what applications users valued and found difficult to use. • The rationalization process gave insight into situations where functionality was duplicated across multiple applications and could be consolidated within one application. • The organization determined that its application portfolio was highly complex, and Info-Tech provided a good framework for more in-depth analysis. • The organization now has a rationalization process that it can take to other business domains. Info-Tech Research Group 20

Use these icons to help direct you as you navigate this research Use these icons to help guide you through each step of the blueprint and direct you to content related to the recommended activities. This icon denotes a slide where a supporting Info-Tech tool or template will help you perform the activity or step associated with the slide. Refer to the supporting tool or template to get the best results and proceed to the next step of the project. This icon denotes a slide with an associated activity. The activity can be performed either as part of your project or with the support of Info-Tech team members, who will come onsite to facilitate a workshop for your organization. Info-Tech Research Group 21

Info-Tech offers various levels of support to best suit your needs DIY Toolkit “Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful. ” Guided Implementation Workshop Consulting “Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track. ” “We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place. ” “Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project. ” Diagnostics and consistent frameworks used throughout all four options Info-Tech Research Group 22

Visualize your application portfolio strategy in three ways: doit-yourself, Guided Implementations, or an onsite workshop 1. Lay Your Foundations Best-Practice Toolkit 2. Plan and Test Your ARF 1. 1 Define Motivations, Goals, and Scope 2. 1 Dispositions and Application Assessments 1. 2 Iteration and Engagement Planning 3. 1 Perform First Iteration Define the motivations and goals for rationalization and the metrics to gauge success. Define “application” in your organization. Identify rationalization activities, outputs, and the core APM team who will execute them. 3. Initiate Your Roadmap 4. 1 Prioritize and Roadmap Applications 4. 2 Ongoing Rationalization and Roadmapping 3. 2 First Iteration Retrospective If required, adapt Info-Tech’s dispositions. Determine and prioritize your dispositions. Define an initial AFR. Roadmap your dispositions. Understand how to use Info-Tech’s Application Rationalization Tool. Build an action plan for next iterations and ongoing activities. Apply the application assessments for business value, TCO and technical health. Identify your first iteration. Perform a retrospective for your first iteration, and adapt AFR. Guided Implementations Module 1: • Lay Your Foundations Modules 2 and 3: • Assess Business Value • Gather Application Information Module 4: • Initiate Your Roadmap Phase 1 Outcomes: • Goals and motivations for rationalization • Definition of “application” • Defined dispositions • Defined core APM team and handoffs Phase 2 Outcomes: • Adapted Application Rationalization Tool • Completed application assessments • Recommended depositions Phase 3 Outcomes: • Determined and prioritized dispositions • Initial application portfolio roadmap • Action plan for next steps and ongoing activities Onsite Workshop Project Outcomes Info-Tech Research Group 23

Application Rationalization Workshop Overview Contact your account representative or email Workshops@Info. Tech. com for more information. Pre-Workshop Day 1 Workshop Day 2 Workshop Day 3 Workshop Day 4 Post Workshop Day Select Scope of Workshop Lay Your Foundations Assess Business Value Gather Application Information Assess and Select Dispositions Put Your Practice Into Action 2. 1 Review Application Rationalization Tool 3. 1 Determine TCO for focused apps 4. 1 Determine dispositions 5. 1 Finish deliverable items 2. 2 Review focused apps, capabilities & areas of functionality overlap 3. 2 Determine technical health of focused apps 4. 2 Prioritize dispositions 5. 2 Launch next iterations 3. 3 Review APA 4. 3 Initiate portfolio roadmap 1. 1 Introduction Deliverables Activities 0. 1(recommended) APA Diagnostic 0. 2 Narrow the scope of the first iteration (target five apps) 0. 3 Identify and invite the appropriate application SMEs • APA Diagnostics results report • List of focused apps (target five apps) • Workshop participant list 1. 2 Define motivations and goals for rationalization 1. 3 Define “application” 1. 4 Identify team and responsivities 1. 5 Adapt target dispositions 1. 6 Initiate application rationalization framework (ARF) • Goals, motivations, and metrics for rationalization • Definition of “application” • Defined dispositions • Defined core APM team and handoffs 2. 3 Define business value drivers 2. 4 Determine the value score of focused apps • Application Rationalization Tool • List of functional overlaps • Weighed business value drivers • Value scores for focused application • Value Calculator 3. 4 Review recommended dispositions 3. 5 Perform retrospective of assessments and adapt ARF • TCO of focused applications • TCO Calculator Technical health of focused apps • Defined rationalization criteria • Recommended disposition for focused apps 4. 4 Build an action plan for next iterations and ongoing activities 4. 5 Finalize ARF • Disposition Prioritization Tool • Action plan for next iterations and ongoing activities • Completed and tailored ARF • Workshop report Info-Tech Research Group 24